The People’s Bank of China and Federal Reserve delivered a one-two punch to the dollar Friday, spurring the biggest selloff in a month and raising the specter of further weakness ahead.
The PBOC announced that banks would resume using the “counter-cyclical” factor when calculating the yuan’s daily reference rate, restraining the influence of market forces that have been driving the currency lower versus the greenback. Roughly three hours later, Federal Reserve Chairman Jerome Powell gave foreign-exchange traders another reason to sell the dollar, saying he sees little sign of inflation accelerating above the central bank’s 2 percent target.
